Trends in Spending on Social Assistance Over the Last 25 Years Did welfare reform (PRWORA, 1996) influence the trends? Did the federal government successfully shift responsibility for social assistance spending to state and local governments?
Table 1 Total Federal, State, and Local Spending by Program Millions of Nominal Dollars Year Medicaid AFDC/TANF Food Stamps SSI EITC GA 1980 25,781 13,019 9,576 8,435 2,033 1,386 1990 72,492 21,200 17,686 17,233 5,303 2,924 2000 207,195 14,490 20,341 35,066 25,800 2,649 2002 258,216 13,035 24,054 38,522 27,830 3,251 Real 1983 Dollars Per Capita Year Medicaid AFDC/TANF Food Stamps SSI EITC GA 1980 1374 694 510 450 108 74 1990 2217 648 541 527 162 89 2000 4276 299 420 724 532 55 2002 4973 251 463 742 536 63 Sources: Various issues of the Statistical Abstract of the United States, U.S. Department of Commerce, Bureau of the Census
Figure 1 Total Federal, State, and Local Spending by Program 250 200 Millions of Real 1983 Dollars 150 100 AFDC/TANF Food Stamps EITC SSI - Total 50 0 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Year 1998 1999 2000 2001 2002
Figure 2 Medicaid Spending 1600 1400 Millions of Real 1983 Dollars 1200 1000 800 600 400 Federal State and Local Total 0 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Year 2000 2001 2002 200
60 Figure 3 Average Monthly Recipients by Program 60 EITC 50 50 40 40 Medicaid Millions of People 30 20 30 20 EITC Food Stamps AFDC/TANF SSI Medicaid 10 10 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Year
Table 2 State Budget Shares by Category (Percent) Year Public Welfare Health + Hospitals Higher Education Elementary and Secondary Education Other 1980 19.4 7.8 12.3 21.8 38.7 1985 19.5 8.0 13.9 21.0 37.7 1990 20.7 8.4 13.2 20.7 37.1 1995 26.6 8.2 12.2 19.4 33.6 2000 24.8 7.8 12.5 21.0 34.0 2003 26.9 7.6 12.5 20.3 32.7 Source: U.S. Census of Governments
Table 2 (continued) State Budget Shares by Category (Percent) Year Public Welfare Categories Medical vendor payments Cash Assistance 1980 8.3 3.3 7.8 1985 9.3 2.8 7.4 1990 11.1 2.4 7.2 1995 16.4 2.1 8.1 2000 15.9 1.2 7.7 2003 18.1 1.0 7.8 Source: U.S. Census of Governments Other Public Welfare
Findings: Trends in Spending Medicaid, SSI and EITC grew rapidly; resulting in a remarkable shift toward the federal government AFDC/TANF declined post welfare reform, even through the 2001 recession Cash assistance comprised a meager part of state budgets; Medicaid contributed a large and growing share
Evaluating TANF: What Did (or Didn t) Welfare Reform Accomplish? Rebecca M. Blank University of Michigan December 2005
State TANF programs n Increased welfare-to-work efforts n Increased earnings disregards n Enforced sanctions n Established time limits n Few cash benefit changes Result: State and federal welfare dollars for noncash assistance rose from 23% in 1997 to 56% in 2002; proportion of money spent on direct cash assistance fell from 77% to 44%.
Other Program Changes n Child care subsidies rose n Declines in AFDC led to initial declines in Food Stamp and Medicaid usage (although other Medicaid changes had delinked it with cash assistance). These programs have made changes to better serve working low income families. n EITC increases n Minimum wage increases
Also A very strong economy between 1995-2000 assisted states in their efforts to move women off welfare and into work.
6,000,000 Figure 1 Total AFDC/TANF Caseloads Number of Households Receiving AFDC/TAN 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 1996 Welfare Reform 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Year Note: 2004 data is through June of 2004. Source: Website for Agency for Children and Families, Department of Health and Human Services (http://w w w.acf.dhhs.gov)
Figure 3 Percent of Single Mothers Reporting Work During the Year 100% 90% 80% 70% More than High School Diploma Only High School Diploma 60% 50% No High School Diploma 40% 30% 20% 10% 0% 1988 1990 1992 1994 1996 1998 2000 2002 2004 Year Source: Author's tabulations of the March Current Population Survey
Poverty Rates in Total and Among Single Mother Households Percent 40 Rate Among Single Mothers 35 30 25 20 Total Poverty Rate 15 10 5 0 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: U.S. Bureau of the Census
Table 1 Single Mothers Income Composition Percent of Total Income Total Income (in 2000 dollars) Public Assistance Own Earnings Other Earnings Other Income 1985 $20,417 23.82% 49.03% 5.49% 21.66% 1990 18,412 22.63 53.32 4.15 19.90 1995 20,026 16.46 56.52 3.63 23.39 2000 23,654 5.27 68.77 4.19 21.77 2001 23,741 4.71 67.56 4.29 23.45 2002 23,805 4.45 67.18 3.98 24.40 Note: Total income is the mean dollar value (in 2000 dollars) before taxes. Public Assistance is composed primarily of AFDC and TANF benefits. These calculations are pre-tax and do not include the inputed value of any in-kind benefits.
Key missing information in these calculations: n Work expenses n Tax and transfer benefits n Cross-household transfers
Follow welfare reform Very substantial declines in welfare usage, increases in work, and increases in overall income. In a slower economy these gains have been eroded but are still substantial. It s not entirely clear how much of this was due to welfare reform, by itself, versus the economy and other policy changes
What Big Questions About Welfare Reform Remain Unanswered? n Interpreting the Caseload Decline and Employment increase Both changes were far greater than anyone would have predicted Uncertainty about why such a large changes occurred * Synergies? * Behavioral shifts? * Misinformation?
What Big Questions About Welfare Reform Remain Unanswered? n The Effects of an Economic Slowdown in the new Policy Regime? So far very limited effects. * Is this the fulfillment of the promise of welfare reform? * Is this just a mild slowdown? * Are we missing key measures of economic pain?
What Big Questions About Welfare Reform Remain Unanswered? n Relation of Assistance Programs to Family Composition & Fertility Major goal of welfare reform, but timing of changes doesn t match timing of policy change Current research investigating policy/marriage/fertility links is still limited and contradictory
Conclusions n The exact effects of welfare reform, by itself, remain unsettled. That said, substantial behavioral changes have occurred. n Transformation of the public assistance system is still a work-in-progress. A work-oriented welfare program is still only partially implemented. Need to pay attention to health care, child care, and wage support. n Role of economy remains key
The Changing Role of Medicaid: From Babies to Boomers and Beyond Leemore Dafny Northwestern University
The Nation s Health Dollar, 2000 Medicaid and SCHIP 15% Other Public 1 12% Other Private 2 6% CMS Programs 33% Private Insurance 34% Medicare 17% Out-ofpocket 15% Total National Health Spending = $1.3 Trillion
Medicaid Enrollment, 1990-2000 45 40 36 4% 42 9% 35 Millions 30 25 20 15 25 4% 68% 68% 67% Other AFDC/TANF Disabled 65+ 10 5 0 15% 16% 16% 13% 11% 9% 1990 1995 2000
Medicaid Enrollment, 2000-2004 Millions 60 55 50 45 40 35 30 25 20 45 23% 49% 48 25% 49% 51 26% 49% 53 55 26% 26% 49% 49% Adults Children Disabled 65+ 15 10 17% 17% 16% 16% 16% 5 0 10% 10% 10% 9% 9% 2000 2001 2002 2003 2004
Medicaid Spending by Eligibility Category, 1990-2000 180 168 2% Billion ($) 160 140 120 100 80 60 65 2% 27% 120 2% 26% 41% 26% 43% Other AFDC/TANF Disabled 65+ 40 20 38% 33% 30% 26% 0 1990 1995 2000
20.0% 15.0% 10.0% 5.0% 0.0% -5.0% Growth in Spending Per Enrollee, 1996-2004: Private Insurance, Medicaid, and Medicare Private Medicaid Medicare 1996 1997 1998 1999 2000 2001 2002 2003 2004 Cumulativ Increase 93% 26% 45% -10.0%
Medicaid Managed Care Enrollment, 1996-2001 Number of People (in Millions) 20.8 21 18.8 17.8 18 16.6 15.3 15 13.3 12 9 6 3 0 1996 1997 1998 1999 2000 2001 % Managed Care 40% 48% 54% 56% 56% 57%
Total Medicaid Expenditures by Type of Service, 1999 Capited Payments and PCCM* Services 14% Inpatient & Outpatient Hospital 19% Institutional Long Term Care 29% Prescription Drugs 11% Home Health & Other Community- Based Services** 17% Physicians & Other Practitioners 5% Clinic, Lab & X-ray 5% Total = $152 Billion in FY 99
Medicaid Spending for Long-Term Care, 1992-1998 Home and community-based services are a growing share of Medicaid s long term care spending. Real Spending in Billions $70 $60 $50 $40 $30 $20 $43.8 14.9% $49.1 $52.8 25.3% $59.1 Cumulative increase 18% $10 129% $0 1992 1994 1996 1998 Home and Community Care Spending Institutional Care Spending
Controlling Spending on Long-Term Care Short-term policies Give block grants to states to encourage creative solutions/reduction in waste and fraud Provide tax deductions or credits for elder care Enroll elderly and disabled in managed care Long-term policies Facilitate private long-term care insurance markets Improve health of men
BACKUP SLIDES
Table 3.25 Medicaid Beneficiaries and Payments by Eligibility Group, 1999 Payments for the elderly, blind and disabled account for 71 percent of total payments. 100% 90% 80% 21% Adults Unknown 10% 15% 3% 70% 60% 50% 51% Children 40% 30% 72% 20% 10% 28% Aged, Blind & Disabled 0% Persons Served FY 99 Payments Note: (1) Totals may not equal 100% due to rounding; (2) Payments describe direct Medicaid vendor payments and Medicaid program expenditures for premium payments to third parties for managed care (but exclude DSH payments, Medicare premiums and cost sharing on behalf of beneficiaries dually enrolled in Medicaid and Medicare); (3) disabled children are included in the aged, blind & disabled category shown above. Source: CMS, CMSO, Medicaid Statistical Information System.
Table 3.30 Births Financed by Medicaid as a Percent of Total Births by State, 1998 Medicaid pays for about 1 in 3 of the nation s births. WA MT ND MN VT NH ME CA OR NV ID AZ UT WY NM CO SD NE KS OK TX IA WI MO AR LA IL MS MI IN KY TN AL OH GA WV NY PA VA NC SC NJ MA RI CT DE MD DC FL AK Less than 28.8% 28.8% to 33.9% HI 34.0% to 41.3% More than 41.3% No data Note: CO, GA 1997 data; KY, NJ, VT 1996 data. Source: Maternal and Child Health (MCH) Update: States Have Expanded Eligibility and Increased Access to Health Care for Pregnant Women and Children, National Governors Association, February, 2001, Table 23, at http://www.nga.org.
Table 3.31 Medicaid Beneficiaries by Eligibility Group, 1975-2001 Children historically represent the largest eligibility group of Medicaid beneficiaries. Persons Served (in millions) 50 Age 65 & Older Blind & Disabled Children Under 21 Adults 40 Other** 30 20 10 0 1975 1980 1985 1990 1995 1999 2000 2001 Fiscal Year 2001 Total = 46.1 million Adults 10.4 million Children Under 21 23.1 million Blind & Disabled 7.9 million Age 65 & Older 4.8 million *Note: (1) In 1998, a large increase occurred in the number of persons served which is mainly the result of a new reporting methodology of classifying payments to managed care organizations; FY 1998 was the first year capitation payments were counted as a service for purposes of the HCFA 2082 reporting, and thus all managed care enrollees were counted as individuals receiving services; this new methodology probably has the greatest effect on the reported number of children; (2) the term adults as used above refers to non-elderly, non-disabled adults; (3) disabled children are included in the blind & disabled category shown above. **The Other category was dropped in 1999. Source: CMS, CMSO, Medicaid Statistical Information System.
Table 3.35 State Children s Health Insurance Program Spending and Enrollment, 1998-2001 The SCHIP program covers a growing number of uninsured low-income children. Spending Enrollment* 4.5 4 $3.8 5 4.6 million Dollars in Millions 3.5 3 2.5 2 1.5 1 0.5 0 $2.8 $1.1 $0.2 FY98 FY99 FY2000 FY2001 4 3 2 1 0 3.3 million 2.0 million 1.0 million CY98 FY99 FY2000 FY2001 *Note: Ever enrolled in SCHIP during the year, not a point in time estimate. Source: CMS, Office of the Actuary for spending data. Center for Medicaid and State Operation, FY 2001 SCHIP Annual Enrollment Report.
CA* OR* Table 3.36 State Children s Health Insurance Program Plan Type by State, 2002 WA* NV* ID* UT* AZ* MT* Plan activity as of October 2002 WY * NM* CO* ND* SD* NE* KS* TX* OK* MN* IA* MO* AR* LA* WI* IL* MS* NY* MA* MI* RI* PA* NJ* CT* IN* OH* DE* WV* MD* VA* KY* DC* NC* TN* SC* AL* GA* FL* VT* NH* ME* AK* HI* Separate State Child Health Plan Medicaid Expansion Combination * State Plan Amendment Number of Approved Separate State Child Health Plans: 16 (AZ, CO, DE, GA, KS, MT, NC, NV, OR, PA, UT, VT, VA, WA, VW, WY) Number of Approved Medicaid Expansions: 21 (AK, AS, AR, CNMI, DC, GU, HI, ID, LA, MN, MO, NE, MN, OH, OK, PR, RI, SC, TN, VI, WI) Number of Approved Combination Plans: 19 (AL, CA, CT, FL, IA, IL, IN, KY, MA, MD, ME, MI, MS, ND, NH, NJ, NY, SC, TX) Source: CMS Center for Medicaid and State Operations.
Table 3.37 State Children s Health Insurance Program Enrollment by Plan Type, 2001 Most SCHIP beneficiaries received services in states that combined a State Children s Health Insurance Program with a Medicaid Expansion. 828,000 Separate State Children s Health Program 18% Combined SCHIP & Medicaid Expansion 69% 3,174,000 598,000 Medicaid Expansion 13% 4.6 Million Total Children in FY 2001 Source: CMS The State Children s Health Insurance Program Annual Enrollment Report FY 2001.
The Increased Role of SSI in Addressing Child Poverty Melissa S. Kearney Brookings Institution IPR Policy Briefing Chicago, IL December 5, 2005
Supplemental Security Income (SSI) Since 1972, SSI has provided cash assistance to aged, blind, and disabled persons below federally mandated income/asset limits. Historically, adults have been overwhelming majority. Current year - benefit payments of $38B to 7.1 million recipients, of which $7B are to 1.04 million children 2004 avg child benefit payment $506/mo ($490 fed, $66 state) SSI now a very important government program for low-income families tremendous growth in child participation. February 1990, Sullivan v. Zebley effect of decision was to loosen eligibility criteria. Number of children on SSI increased from 265,000 at time of decision to 955,000 in 1996. (Tightened under PRWORA)
Number of children on SSI 1,200,000 1,000,000 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 800,000 600,000 400,000 200,000
SSI, Welfare, and Poverty 1990-2003 1990 1996 2000 2003 SSI Number of children on SSI 309,000 955,000 847,000 959,000 Percent of children on SSI 0.50% 1.40% 1.20% 1.30% Total number of (fed) SSI recipients (000s) 4,817 6,614 6,602 6,902 Welfare Number of children on AFDC/TANF (000s) 7,781 8,355 4,339 4,004 Percent of children on AFDC/TANF 12.10% 11.90% 6.10% 5.50% Total AFDC/TANF recipients (000s) 11,497 12,156 6,043 5,432 Poverty Number of children in poverty 13.4M 14.5M 11.6M 13.0M Percent of children in poverty 20.60% 20.50% 16.20% 17.80%
Ratio of AFDC to SSI-child families 20 18 16 14 12 10 8 6 4 2 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
SIPP data on households with children n Now as many children in hholds with SSI as TANF. n Average SSI income much higher. n Income, earnings, poverty outcomes much better in SSI hholds. 1990 2001 AFDC SSI TANF SSI % of Children 10.80% 2.80% 4.90% 4.80% % with Any SSI 11.40% 100.00% 22.20% 100.00% % with Any AFDC / TANF 100.00% 39.50% 100.00% 19.40% Avg SSI Income $237 $1,866 $520 $2,216 Avg AFDC / TANF Income $2,047 $816 $1,202 $204 Mean household earnings $2,389 $5,559 $3,238 $6,866 Mean total income $5,301 $9,951 $5,716 $10,996 Poverty Ratio 0-49% 35.90% 6.10% 34.00% 9.20% Poverty Ratio 50-99% 40.60% 36.20% 34.10% 26.20%
Shifting from welfare to SSI n States have always had incentive to move eligible recipients from AFDC to SSI; incentive stronger under TANF n Individuals in states with low-afdc benefits have always had incentive to switch to SSI; incentive stronger under welfare reform n Academic research confirms that switching increased post-zebley and that switching more prevalent in low-afdc benefit states (Kubik, 1999; Garrett and Glied, 2000); in states aggressively pursuing welfare reform (Schmidt and Sevak, 2004); and in states experiencing fiscal distress (Kubik, 2003) n Much research on impacts of AFDC; Duggan and Kearney (2005) investigate impact of child SSI participation on household outcomes
Impact of Child SSI on Household Income (Duggan and Kearney, 2005) Three months after a child in the household enrolls in SSI n Total household SSI income increases by about $570/ month n Total unearned income increases by about $510/month (some offset of welfare/fs) n No observed reduction earnings n Total household income increases by at least as much as increase in unearned income. So, for families who enroll a child on SSI, there is a net increase in income. But does it have an impact on poverty? n Depends on how needy families are n Depends on whether SSI transfer provides enough money
Impact of Child SSI on Child Poverty (Duggan and Kearney, 2005) Three months after a child in the household enrolls in SSI n 13.2 pp reduction in probability that family lives in poverty n 11.9 pp reduction in probability that hhold lives <50% of poverty threshold n For 10 kids enrolled in SSI, number of children in poverty falls by 2.4. n For 10 kids enrolled in SSI, number of children in severe poverty falls by 3.4 and number of people in poverty falls by 5.1. Effects are most pronounced for households that were previously enrolled in AFDC/ TANF! (24% of our hholds were on AFDC in wave before kid SSI). For every 10 kids who enroll on SSI. n Number of kids in poverty falls by 4.64 n Number of kids in severe poverty falls by 6.9 n Number of people in severe poverty falls by about 10
Back of the envelope calculations From 1990-2003 ~ 650,000 additional children on SSI. Multiplying these by our estimated impacts suggests that because of child SSI participation n 156,000 fewer kids in poverty n 241,000 fewer kids in severe poverty n 356,000 fewer people in severe poverty Sizable numbers! From 1990 to 2003: approx 400,000 fewer children in poverty. Understates full impact of program, because this only considers child SSI receipt.
Change for the better? n Effective anti-poverty program for those who participate not a leaky bucket n Federal redistribution especially benefits children in poor states n Trade-off: more money to a more finely-targeted group; limited potential as general anti-poverty program as only families with a disabled child qualify (9% of 5-15 yr olds living in poverty are identified as disabled in census)